Expert Conferences and Joint Reports

Posted by Chris Westworth on 20 August 2021
Chris has put together some thoughts on participating in expert conferences or conclaves and preparing the joint report afterwards in an article based on his recent experiences
Posted in:expert witnessConclavejoint reportexperts conference  

Change of Address

Posted by Stephanie Kemp on 23 March 2021
We are now at Suite 27, Level 11, 66 Clarence Street, Sydney, emails and mobile phone numbers are the same.  Working from home during Covid and with more and more briefs coming electronically, we realised we could survive on much less office space, so we have moved into a smaller space.
Posted in:address  

Still open for business and here is our latest newsletter

Posted on 24 April 2020
Physical distancing has provided the opportunity for a change of pace, as work these days involves far fewer physical meetings.  Our newsletter reflects on the challenges facing accountants and auditors this year and at how our practice has accommodated these changed circumstances.
Posted in:APES 110AUASBaccounting standardsimpairmentASICAASBAmending standardsAASB 101Financial Reportingnot-for-profitIFRS 16disclosureAuditAuditorRDRTier 2Assurance  

Covid 19 and working remotely

Posted on 26 March 2020

WK's office is currently closed but we are continuing to work remotely from home while the crisis continues, using various technologies:

  • We have both Teams and Zoom which allow video conferencing and document sharing. We have also participated in meetings using Skype for business and Blue Jeans;
  • We use Dropbox for most of our document storage and will monitor its capacity;
  • We have received documents via a variety of secure transfer methodologies;
  • We will still prefer to have electronic audit working papers on laptops using the software used by the auditor.

The AASB and AUASB have put out an FAQ publication to assist accountants with the financial reporting and auditing aspects of what we are going through.

We hope our clients and contacts remain healthy and in good spirits.


Our 2019 newsletter

Posted on 13 January 2020
 It has become our habit to reflect on the year's work over the summer break and put down some thoughts in our newsletter
Posted in:Financial Reportingexpert witnessAudit  

"For everything to stay the same, everything must change" - news from the IFRS Conference

Posted on 23 June 2019

Hans Hoogeworst, Chair of the IASB, opened this year's IFRS conference with a quote from Lampedusa's novel, The Leopard: "For everything to stay the same, everything must change".  He went on to outline the main themes of the IASB's work program and the conference agenda.  He emphasised how important it was for the board's standards to stay relevant in an ever-changing world.

Better communication is the key in our complex business environment.  The IASB's main projects in this area are:

  • The primary financial statements project, with particular emphasis on the income statement, which is still the primary statement for most users; and
  • Management commentary, which is the main vehicle for broader developments in reporting.

As part of their work on the income statement, the IASB will address "self-defined subtotals", a.k.a. "management performance measures" or "non-GAAP measurements".  Out of a sample of 60 financial reports, they found 41 reported "operating profit" but across the 41, there were no less than 9 different definitions of what operating profit comprised.  The IASB has adopted an "if you can't beat them, join them" approach, on the basis that non-GAAP is here to stay, but some of the abuses can be curtailed.

The board is going to define several of the commonly used "non-GAAP" measures, such as operating profit, with separate definitions for non-financial and finance industry reporters.  They also plan to require disclosure of profit before finance costs and tax, to enable comparison of entities regardless of their finance structure.  These proposals will bring management performance measures (MPMs) within the scope of audit and the regulators.  MPMs will have to be explained in a note to the financial statements and if an entity choses to give its own measure priority over an IFRS defined measure, they will have to disclose the reason.

The proposals will also address disaggregation and make excessive disaggregation more difficult.  There will be additional guidance on what constitutes unusual items requiring separate disclosure they can only be unusual if they have limited predictive value and should not appear again for several years.

The second big communication project is the update to the Practice Statement on Management Commentary.  Management commentary is seen as the vehicle for communicating information that cannot be captured by the financial statements, but will eventually have a financial impact - the broader context in which the financial statements have to be read and the impact of non-financial factors on long-term value creation.   It embraces issues such as the business model, the nature and role of intangible assets in the business and the impact of climate change and taps into the impetus gathering around integrated reporting.

Simultaneously, the IASB is continuing to work on its disclosure initiative project to help preparers reduce unnecessary disclosures that blur the message and focus on material issues.  It has published a report on how companies have improved communication, showing disclosures before and after and is using IAS 19 Employee Benefits and IFRS 13 Fair Value Measurement as test standards to pilot improvements to disclosure.

The IASB work program

IFRS amendments expected in 2019 are:

  • Classification of liabilities as current or non-current; and
  • IBOR reform and its effects on financial reporting.

Projects at an earlier stage scheduled to result in discussion papers in 2019 are:

  • Comprehensive review of IFRS for SMEs;
  • Dynamic risk management;
  • Rate regulated activities; and
  • Goodwill and impairment.

We can also expect an exposure draft on primary financial statements.

In 2020 we can expect discussion papers on:

  • Business combinations under common control;
  • Review of disclosures; and
  • Management commentary.

Initial feedback on new standards

A panel of preparers and users commented on how they had found the experience of implementing IFRS 9 on financial instruments and IFRS 15 on revenue.  Surprisingly, corporates experienced less volatility as a result of applying IFRS 9 than they had expected.  Benefits included more information about fair value and better alignment of accounting with credit risk management. 

IFRS 15 had resulted in greater disclosure even when the accounting was unchanged, which has given entities and their users a better understanding of how they derive their revenue.

One of the analysts however commented that much investing now was done by computers tracking indices and the enhanced disclosures were only any use when human beings were reviewing the accounts!

Goodwill and impairment

Hot off the press after the IASB's June meeting was an update on their project on goodwill and impairment arising from the Post Implementation Review of IFRS 3.  The project is a response to criticism that impairment losses are being recognised too late and simply confirm something the market already knows and that the mandatory annual test is costly and complex. The Board is aiming to publish a discussion paper in the second half of 2019. 

The IASB's own voting was so close on key issues, will contain some radical proposals for comment by the wider community.  They will be asking:

  • Whether the amortisation of goodwill should be reinstated (narrowly rejected by the IASB); and
  • Whether the annual impairment test should be replaced by an impairment test only when indicators of impairment are present (narrowly approved by the IASB).

As part of the proposals the IASB will be advocating better disclosure of information on acquisitions what was the strategic rationale and what drove the acquisition price? This would be supplemented by disclosures about the subsequent performance of acquisitions over the acqyisition accounting period and the two subsequent years did the acquisition generate the synergies or other benefits that management anticipated when they bought the business? 

In our experience an unwillingness to acknowledge impairment of recently acquired assets is a factor in many of the matters we are briefed in.  These additional disclosures have the potential to make businesses and auditors focus on what the entity bought and how the acquisition has worked out and can counteract the danger presented by making the current annual impairment test that only takes place when indicators are present.

Posted in:presentation of financial statementsaccounting standardsExposure draftFinancial Reportingdisclosure  

New proprietary company thresholds

Posted by Stephanie Kemp on 8 April 2019

The long awaited regulation changing the cut off point between small and large proprietary companies has just been issued and is operative from 1 July 2019. 

For a proprietary company to be considered small, it together with the entities it controls must now satisfy two of the following three tests: less than $50m consolidated revenue, less than $25m consolidated gross assets and fewer than 100 employees.

Posted in:Corporations ActFinancial ReportingCompanyReporting  

Better late than never - our review of 2018

Posted by Stephanie Kemp on 21 March 2019
Over the summer break, we reflected on some of the issues that have come across our desks during the course of 2018 and pulled together this newsletter.
Posted in:SMSFAPAPES 110APES 315accounting standardsAssuranceReporting  

The Hayne Report

Posted by Stephanie Kemp on 12 February 2019

CAANZ has uploaded a useful summary of the findings of the Banking Royal Commission and in particular the impact the findings have on the accounting profession, so many of whom act as financial advisers and tax advisers.

As CAANZ put it, "Commissioner Hayne's responses to the issues are informed by the underlying principles he identified in the Interim Report, which reflect six norms of conduct:

  • obey the law,
  • do not mislead or deceive,
  • act fairly,
  • provide services that are fit for purpose,
  • deliver services with reasonable care and skill, and
  • when acting for another, act in the best interests of that other."

As many of the matters we have been involved in have involved interests in schemes that have been aggressively sold by financial advisers to members of their local community who trusted them, we welcome this renewed focus on ethics and transparent charging for advice.

Posted in:ethicsBanking Royal Commission  

World Congress of Accountants 2018

Posted by Stephanie Kemp on 12 November 2018
6,000 accountants from around the world descending on Sydney - what a thought!  The World Congress of Accountants takes place every 4 years and this year it is in Sydney.  Accountants from all over the world learning together and exploring new ideas.
Indigenous dance and welcome to country started the ball rolling on Tuesday morning on what was to be a very Australian day, with a Melbourne Cup afternoon tea in the afternoon showing the race on big screens.
The first keynote address by economic historian Professor Niall Ferguson  was a reflection on the GFC and the unforeseen consequences in its aftermath from 2008 onwards.  He looked at why the outcome could have been much worse but for the economic stimulus provided by China and how the wake of the GFC has had the unforeseen consequence of contributing to the rise in right wing populist politics.  He went on to warn that economic fundamentals have in many ways returned to patterns seen in the early 2000s.
While the conference started with history, and its warnings about unforeseen consequences, its focus was very much on preparing the accounting profession for the future in a digital world where trust in institutions has been severely shaken.  Major themes that crossed over multiple sessions were
  • how to rebuild trust in the community and the role that accountants can play in that preparing high quality relevant and usable information and adding assurance to it
  • how technologies such as artificial intelligence and blockchain together with the growth of available data are affecting our world and the impact that is having on accounting, reporting, managing people and so much more

As well as learning more about the new digital world (articles on these subjects had been lying unread in my reading pile for months) from excellent speakers, there were also updates from the international standard setting boards, who are responding to these challenges within their own context.
By Thursday night everyone I spoke to was tired out, but agreed that it had been a wonderful experience that cut across the usual boundaries between professional bodies and enabled everyone to mingle and network outside their usual group.  In the words of one participant, "it made you feel proud to be an accountant".

Posted in:Financial ReportingethicsAssurance  
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Current NEWS

Expert Conferences and Joint Reports

Aug 20 2021
Chris has put together some thoughts on partici...

Change of Address

Mar 23 2021
We are now at Suite 27, Level 11, 66 Clarence S...

Still open for business and here is our latest newsletter

Apr 24 2020
Physical distancing has provided the opportunit...

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